I've been mostly focusing on Student Updates with the Samurai Trading Academy blog recently but I think this will be one of the last of those posts for a while. I guess I better make it a good one! They take a while to put together and I think the point has been made as we've seen some fantastic results from the group and I will be expecting the same from future STA traders as well.

I did want to do something a little different with this post though if we're going to take a small break from student updates, so this post doesn't just cover one day of trading or one week but more than a month with the good days, the great ones, and even the poor ones included.

One thing that really bothers me when it comes to trading forums and websites is that they almost always try to avoid the realities of trading and only focus on the highs at the expense of the lows.

It's easy for someone to post their one good day or a single exceptional trade, but if they lose in each of the other four days or end up down 10 points for the week then what good is it?

This is why I always focus on a full week with the student updates. No picking and choosing charts just to find the good days, but instead an honest reflection of what it's like to trade at a novice to intermediate level where there will be mistakes, there will be losing days, and are unlikely to achieve an 80% win rate week after week.

But what's even better than showing a full week of trades from one of our developing STA traders? A full month of course! Well, the original idea was to do a 4 week post at least, but life and a lot of sight-seeing on my travels got in the way of that so instead of 4 weeks the loyal STA blog readers get an extra week for free.

The Progress of TH - A Newly Developed Samurai Day Trader

I'm extremely pleased with the progress of the select handful of traders I work with and I love seeing the growth in their confidence and profits as they make and learn from mistakes, learn to read the market and anticipate future moves, and begin to develop their trading intuition for the odd "gut instinct" trade.

One of these new traders is TH, a young Canadian trader who has seen good growth in his profitability over the course of his first weeks working with me in the STA group. You might remember TH from a recent post as well where he along with others in the group saw exceptional results.

Although TH's results have been very good and improving during the STA Training Program, there's nothing particularly special about his prior experience in trading. He came into the group with no experience day trading or participating in the Emini S&P 500 (ES) market. At most he had some very limited experience of just a few months in the NYSE trading basic breakouts and pullbacks.

I point this out because it's important to realize that you don't need a lot of experience or established trading skill to become successful in a short period of time as a day trader.

All you need is motivation, determination, and the willingness to work hard to achieve your goals.

So let's just jump right into TH's numbers over the first five weeks and then we will look at a few lessons we can glean from them. I've also included a handful of charts for a variety of days (including some of TH's notes) so you can get a bit of perspective on how things were traded and the thought process involved.

The Numbers

A Few Lessons From the Data

Win Rate Isn't Everything

I know this is a topic I've already discussed extensively in the past but this is just one more example to add to the pile. Yes, win rate is important and it's helpful to sustain a ratio of at least winning more often than you lose (if only for the psychological benefits) but ultimately it's only one part of the profitability equation.

What matters is our trading expectancy and that factors in both the win rate and our reward to risk ratio. Without considering both of these factors we simply can't get a full picture of the overall performance of our methodology.

In the case of TH we see a trader who has started with an acceptable win rate of 50% but he was still able to make a good profit due to his winning trades being much larger than his losses. His two 50% win rate weeks were still his lowest in terms of overall profitability but there's plenty of methods out there that would be in the negative with that hit rate because the wins are small and the losses are large.

By focusing on reward to risk more than the win rate in the early stages of trader development at STA, it not only allows those who are less experienced to see consistent profitability but it also removes a lot of the pressure and emotional toll that come with trying to maintain an exceptionally high win rate day after day. For us, a losing trade or a losing day is no big deal because the edge is strong and drawdowns are small, which leads to quick recoveries after difficult conditions or even completely natural novice mistakes.

You Don't Need to Trade More to Make More

As you can see in the chart above, some interesting things started to happen around Week 4. There is a subtle progression I try to guide traders through and it was at this point that TH started to focus a little bit more on his profit targets and expanding some while contracting others.

It's important that a trader doesn't try to do this right away and simply focuses on execution and managing risk but once some consistency has been achieved and confidence is high we can take additional steps to expand profitability.

What we see here are the effects of this transition starting with a big jump in profitability at Week 4 and then another exceptional result in Week 5. The interesting thing to note however, is that in Week 5 there were actually 7 less trades taken but more points of profit were made.

This is something quite powerful and once the awareness is developed for a trader to pick his spots with contextual target setting or simply to know when to wait out difficult market conditions, it opens up a new trading experience. The pressure to always be in a trade decreases, the trader can more easily assess the overall market situation and opportunity at any given time, and finding the elusive "trading zone" which allows elite performance is much easier to achieve.

The Potential for Further Growth is Very High

Probably the most exciting thing about seeing these kinds of results from STA traders is that many are new to day trading and still have considerably more potential they've yet to tap in their trading. TH is a great trader to profile for this post because although his results aren't actually the highest in the group, he is someone who is very new to trading overall and still very early in his development.

With this result in 5 weeks, what can be achieved in 5 months or even 5 years?

The fact is that you don't actually need bigger numbers than this to make a substantial income as a professional full time trader or even as a part-time trader. At STA we aim for a consistent 10-15 points per week which this trader achieves and that already puts someone into a pretty elite category.

What changes as time goes on for most traders is that they focus a lot less on achieving huge numbers and start trading more for pure enjoyment and challenge with the profits becoming secondary. At this point a lot of things often open up for the trader allowing them to fulfil their various monetary and lifestyle goals.

With a bit of additional experience and some newly developed trading instinct, it's not too difficult to maintain similar results to these but in less hours per day. There's only a few hours of trading in most of these charts but an experienced trader who is able to take advantage of a few more advanced opportunities at the right time can often wrap up with nice daily and weekly results with as little as a couple of hours per day.

The difficulty then becomes finding other passions which you can use to fill up all the rest of the hours of your day. As long as you've got some passions and hobbies outside trading you will find ample time to exercise them, family can always take scheduling priority, or whatever else you want. Though the truth of it is that I would blame you if you just wanted to keep trading just for the fun of it!

Cody has over a decade of experience day trading the Emini S&P 500 (ES) and Forex markets and has worked personally with dozens of traders to help them achieve consistent profitability and make trading a full-time career.

You’re welcome, Marlon. There’s a lot of methods out there that look to win 90%+ of the time but many have a miniscule edge overall (if any) due to very small wins compared to losses. I think it’s important to realize as a trader that being right all the time isn’t really all that important. All that matters is that you’re PROFITABLE! So find something with a good combination of R:R and win rate that leads to a strong positive expectancy then just stick to the plan and you’ll be just fine.